AFIN achieved robust loan portfolio growth of ~83% in FY26, with total advances reaching LKR ~81.3Bn (FY25: LKR ~44.5Bn), materially outpacing Sector-wide loan growth. This was primarily driven by the 4W segment, which constituted ~42.3% of the total portfolio, followed by 2W (~32.5%) and 3W (~15.4%) segments. The tangible collateral backing across all vehicle categories is a key structural support to AFIN's credit profile. Asset quality metrics remained strong with gross NPL ratio declining to ~2.5% in FY26 (FY25: ~3.9%), comparing favorably against the LFC Sector average of ~6.1%.
Profitability improved with PAT rising to LKR ~3.1Bn in FY26 (FY25: LKR ~2.7Bn) reflecting steady earnings capacity. The margins compressed compared to previous years as the Company's portfolio shifted towards relatively lower margin and highly competitive 4W segment. AFIN's NIM was at ~15.1% in FY26 (FY25: ~20.1%). However, NIM remains above the Sector average. The Company aims to maintain its profitability and growth momentum, going forward.
AFIN's CAR declined sharply to ~16.65% in FY26 from ~26.12% in FY25 as the loan portfolio grew. This reduction has brought AFIN's CAR below the current LFC Sector average of ~18.3% and similar rated peers. While the ratio remains above minimum regulatory thresholds, the Company will have to balance its growth with capital buffer. Maintaining strong capitalization is essential. AFIN's modest market share (~3.2% of LFC Sector assets) is balanced by its established presence in the LFC segment and strong parentage.
AFIN's funding profile remained broadly stable during FY26. The deposit base remained low in FY26 LKR ~12.4Bn (FY25: LKR ~6.2Bn), while borrowings increased to LKR ~52.2Bn (FY25: LKR ~25.8Bn) as AFIN's funding base remains predominantly reliant on borrowings. This has resulted in higher leverage when compared to peers.
AFIN's rating incorporates its association with the David Pieris Group. The Group's financial capacity and demonstrated support for the Company, its dominant position as the exclusive Sri Lankan distributor of Bajaj-branded vehicles through David Pieris Motor Company, and the inherent operational synergies are key rating considerations that augment AFIN's credit profile.
The rating is assigned a “Positive Outlook” that reflects the Company’s sustained performance indicators and asset quality. A rating upgrade would be contingent upon strengthening capitalization and, in turn, CAR to commensurate with higher rated peers. Similarly, sustaining strong NIM and asset quality is imperative. Conversely, further reduction in capital adequacy or a sustained compression in profitability metrics will have negative rating connotations.